DoD awards $147M contract for canister production to BAE Systems, highlighting manufacturing needs
Contract Overview
Contract Amount: $147,017,092 ($147.0M)
Contractor: BAE Systems Land & Armaments L.P.
Awarding Agency: Department of Defense
Start Date: 2024-07-12
End Date: 2029-07-12
Contract Duration: 1,826 days
Daily Burn Rate: $80.5K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: FY24-27 CANISTER PRODUCTION REQUIREMENTS
Place of Performance
Location: MINNEAPOLIS, ANOKA County, MINNESOTA, 55421
Plain-Language Summary
Department of Defense obligated $147.0 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: FY24-27 CANISTER PRODUCTION REQUIREMENTS Key points: 1. Contract value of $147 million over five years indicates significant demand for canister production. 2. Full and open competition suggests a healthy market for this type of defense manufacturing. 3. The definitive contract type with a firm fixed price provides cost certainty for the government. 4. Award to a single contractor, BAE Systems, warrants monitoring for potential performance or pricing issues. 5. The contract duration of 1826 days (5 years) allows for sustained production and delivery. 6. Focus on canister production points to a critical component within naval or ground systems.
Value Assessment
Rating: good
The contract value of $147 million for five years of canister production appears reasonable given the nature of defense manufacturing. Without specific unit cost data or comparable contract benchmarks, a precise value-for-money assessment is challenging. However, the firm fixed-price structure suggests an effort to control costs. The award to a single, established contractor like BAE Systems, known for defense production, implies a level of confidence in their capability to meet requirements at the negotiated price.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple capable vendors had the opportunity to bid. The presence of three bidders (implied by 'no': 3) suggests a competitive environment, which typically drives better pricing and innovation. This level of competition is a positive sign for the government, as it allows for a thorough evaluation of technical capabilities and cost proposals.
Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a market where contractors are incentivized to offer competitive pricing to secure the award. This process helps ensure that the government is not overpaying for goods and services.
Public Impact
The Department of the Navy benefits from a secure and reliable supply of essential canisters for its platforms. This contract supports the production of critical components for defense systems, ensuring operational readiness. The manufacturing activities will likely occur at BAE Systems facilities, potentially in Minnesota, supporting the industrial base. The contract contributes to maintaining specialized manufacturing capabilities within the defense industrial sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for sole-source reliance on BAE Systems for future canister needs if competition diminishes.
- Dependence on a single contractor could create supply chain vulnerabilities if BAE Systems faces production challenges.
Positive Signals
- Awarded under full and open competition, indicating a robust initial market.
- Firm fixed-price contract provides cost predictability for the government.
- BAE Systems is an established defense contractor with a track record in manufacturing.
Sector Analysis
The manufacturing of specialized components like canisters falls within the broader fabricated metal products manufacturing sector (NAICS 332999). This sector is crucial for defense supply chains, providing essential parts for military equipment. The contract value of $147 million over five years represents a significant, albeit specific, demand within this niche. Comparable spending benchmarks would typically be found within other DoD contracts for similar ordnance components or armored vehicle parts.
Small Business Impact
The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses mandated by this specific award. However, BAE Systems, as a large prime contractor, may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed in the provided information.
Oversight & Accountability
Oversight for this definitive contract will primarily reside with the Department of the Navy's contracting and program management offices. The firm fixed-price nature simplifies some aspects of financial oversight compared to cost-plus contracts. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.
Related Government Programs
- Naval Ammunition Production
- Defense Manufacturing Contracts
- Fabricated Metal Product Manufacturing
- BAE Systems Contracts
- Department of Defense Procurement
Risk Flags
- Potential for limited future competition if market consolidates.
- Supply chain risk associated with reliance on a single prime contractor.
- Need for ongoing performance monitoring to ensure quality and delivery.
Tags
defense, department-of-defense, department-of-the-navy, bae-systems, definitive-contract, firm-fixed-price, full-and-open-competition, fabricated-metal-products, manufacturing, naval-systems, minnesota, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $147.0 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. FY24-27 CANISTER PRODUCTION REQUIREMENTS
Who is the contractor on this award?
The obligated recipient is BAE SYSTEMS LAND & ARMAMENTS L.P..
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $147.0 million.
What is the period of performance?
Start: 2024-07-12. End: 2029-07-12.
What is BAE Systems' track record with similar canister production contracts for the Department of Defense?
BAE Systems Land & Armaments L.P. has a significant history of producing various defense systems and components, including those for armored vehicles and naval platforms. While specific details on past canister production contracts are not provided here, their extensive experience in defense manufacturing suggests a strong capability. The company is a major defense contractor, and its performance on previous, similar contracts would be a key factor in the DoD's decision-making process. A review of past performance evaluations and contract histories would provide a clearer picture of their reliability and quality in delivering such specialized items.
How does the $147 million contract value compare to historical spending on canister production by the DoD?
Assessing the $147 million value against historical spending requires access to detailed procurement data for canister production specifically. This figure represents the total anticipated value over five years (FY24-27). To benchmark this, one would need to analyze prior contracts for similar canisters, considering factors like quantity, specifications, and inflation. Without this comparative data, it's difficult to definitively state if this represents an increase, decrease, or stable level of spending. However, the five-year duration and firm fixed-price nature suggest a planned, sustained requirement.
What are the primary risks associated with awarding a multi-year contract for canister production to a single entity?
The primary risks associated with awarding a multi-year contract to a single entity like BAE Systems include potential supply chain disruptions if the contractor faces unforeseen issues (e.g., labor strikes, material shortages, facility problems). There's also a risk of reduced price competition in future procurements if the market becomes concentrated. Furthermore, over-reliance on one supplier could lead to less incentive for innovation or cost reduction over time. The government's ability to mitigate these risks often involves robust contract management, performance monitoring, and maintaining contingency plans.
How effective is the 'full and open competition' process in ensuring competitive pricing for specialized defense components like canisters?
The 'full and open competition' process is designed to maximize the number of potential bidders, thereby fostering a competitive environment that ideally leads to the best possible pricing for the government. For specialized defense components, its effectiveness depends on the number of qualified manufacturers in the market. If only a few companies possess the necessary technology, expertise, and production capacity, the competition might be limited despite being 'full and open.' The fact that three bids were received suggests a reasonable level of competition, which should have helped in price discovery and negotiation for this $147 million contract.
What are the implications of the firm fixed-price (FFP) contract type for cost control and contractor risk?
A Firm Fixed-Price (FFP) contract type places the primary responsibility for cost control and managing unforeseen expenses on the contractor (BAE Systems). This is generally advantageous for the government as it provides cost certainty and predictability, making budgeting easier. The $147 million award amount is the ceiling, and the contractor bears the risk if their actual costs exceed this. Conversely, if the contractor manages costs efficiently, they realize a higher profit margin. This structure incentivizes the contractor to be efficient and avoid cost overruns, but it also means the government has less flexibility to adjust scope or cost if requirements change significantly.
What is the significance of the NAICS code 332999 (All Other Miscellaneous Fabricated Metal Product Manufacturing) in understanding this contract?
The NAICS code 332999 indicates that the contract is for fabricated metal products that do not fit into more specific manufacturing categories. This suggests the canisters being produced are specialized and may involve complex manufacturing processes beyond simple metal forming. It places the contract within a broad segment of the manufacturing industry that supports various sectors, including defense. Understanding this code helps contextualize the contract within the industrial landscape, highlighting the need for specific manufacturing capabilities and potentially specialized materials or quality control processes required for these 'miscellaneous' but critical fabricated items.
Industry Classification
NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › All Other Miscellaneous Fabricated Metal Product Manufacturing
Product/Service Code: GUIDED MISSLES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SEALED BID
Solicitation ID: N0002423R5324
Offers Received: 3
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Ball Corporation
Address: 4800 E RIVER RD, MINNEAPOLIS, MN, 55421
Business Categories: Category Business, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations
Financial Breakdown
Contract Ceiling: $640,079,257
Exercised Options: $147,017,092
Current Obligation: $147,017,092
Subaward Activity
Number of Subawards: 123
Total Subaward Amount: $42,896,812
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NOT OBTAINED - WAIVED
Timeline
Start Date: 2024-07-12
Current End Date: 2029-07-12
Potential End Date: 2029-07-12 00:00:00
Last Modified: 2025-12-12
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